Gold - Healthy Pullback in Uptrend

Gold has bumped up against its recent highs. This is an area where over the past it has reversed lower. Will this occur again?

In my analysis, the likelihood is that Gold will break through to new relative highs. There may be a pullback in the short-term, but it will be a relatively small and healthy correction.

Take a look at the longer-term SPDR Gold Trust (GLD) Weekly Chart below. You can see that we have been making higher highs and higher lows in an uptrending channel since late 2008. While 100 has been resistance, 95 is now a support level. We also have support below current levels around the 91.5 area -- the previous two pullbacks to the Middle Band & Exponential Moving Average were followed by bounces higher. Weekly Percent R is very strong and both Percent R pullbacks reversed higher before breaching the key 50 mid-level.

Bottom line in my analysis, this looks like a healthy consolidation in the 95 to 100 area, which will precede an upside breakout in GLD.

GLD Weekly Chart

Moby Waller,
BigTrends.com
1-800-244-8376

Disclosure: No current recommendation or position.

Comments

[The Recusant:]

It just slays me when analysts refer to the market as a living organism by using words or phrases like "healthy pullback." The stock market is merely a tracking and anticipation of the psychological reaction of people interacting with one another and objects. I believe they'd see the big picture much more clearly if they stopped personifying it or giving it some mystical life of its own--it's only mental calculations. People make some of the numbers go up and then down. That's it.

Sep 21 11:14 PM

[Mad Hedge F...:]

ite Brace yourself for the impending gold shortage. Gold shortage? Yup. With the launch of the eighth gold ETF this yesterday, the ETFS Gold Trust (SGOL), total ETF holdings of the barbaric relic reached 54 million ounces worth $55 billion, more than total world production in 2008. Last year, South Africa suffered its steepest decline in gold production since 1901, falling 14%, to a mere 232 tons. It now ranks only third in global production of the yellow metal, after China and the US. Severe electricity rationing, a shortage of skilled workers, and more stringent mine safety regulations have been blamed. Choked off credit has frozen the development of new capital intensive deep mines, as it has for everybody else. Rising production costs have driven the global breakeven cost of new gold production up to $500 an ounce. In the meantime, the financial crisis has driven flight to safety demand for gold bars and coins to all time highs. Last year, the US Treasury ran out of one ounce $50 American Gold Eagle coins, now worth about $980. Competitive devaluations by almost every central bank, except Japan, mean that currencies are not performing as the hedge that many had hoped. It all has the makings of a serious gold shortage for the future. Could last year’s downturn be a blip in the eight year bull market? Now that we are solidly over $1,000, kissing $1,025 last night, the match could hit the fuel dump at any time.

Sep 21 11:32 PM

[Northstar10000:]

No pull back in the market. Just an unexpected plunge right thru stops. Israel is coming------------------

Sep 22 09:10 PM

[Keer-eh Khar:]

Good call.

Now all we need is astrike by United Islami-fascist States headed by Iran on Israel-- gold will spike $300-$500 the same day

Sep 25 10:36 AM